Military Pensioners (also known as Chelsea Pensioners, Enrolled Pensioners and Veterans) were soldiers who had served in the British Army and, after becoming disabled or having completed their term of service, were granted army pensions. Their papers were held by the Royal Hospital, Chelsea, so they were known as Chelsea Pensioners; those from Ireland had their papers held by the Royal Hospital, Kilmainham, Dublin.

Pensioners were sent to Van Diemen's Land as guards on convict ships, which was useful for the government as no guards were needed on the return trip. In Van Diemen's Land pensioners were given small grants of land in return for twelve days' military service a year, and the possibility of being called out to defend the colony in case of invasion or civil uprising. Sometimes accompanied by wives and children, groups of pensioners arrived in 1826–27, 1832, and 1850–56.

The first group comprised 63 veterans and their families (provided that these were not too numerous!), although only 43 remained as permanent settlers. They were sent to various parts of the island including George Town, Swansea, Brighton, the Clyde and the Huon (Birch's Bay) settlements. Some were overseers on public works, supervising convicts, while others became mounted police.

In 1832 another group of 109 Chelsea Pensioners with at least 51 wives and 53 children arrived. It is not known exactly where these people settled. The last group was substantial, with 527 men bringing 427 wives and 667 children. In 1851 several contingents were formed from them to serve, in rotation, on the gold fields, where some were involved in the Eureka Stockade.

Pensioners settled in particular in Westbury, Oatlands, Colebrook, Pontville and Campbell Town. As part of the conditions to retain their grant, they were bound to occupy and improve the land for seven years. However, their grants were small (a maximum of ten acres) with all the land except that at Westbury and Port Cygnet described as infertile, and many failed in farming. By 1859, 91 men had died and 103 are recorded as having left the colony. Not long after, few remained on their grants, many leaving, some for towns, others to other states and New Zealand.